Recent Development of Mediation in Vietnam: Opportunities and Challenges! Dzung Manh Nguyen INTRODUCTION First of all, I would like to thank Thailand Arbitration Center (THAC) and International Dispute Resolution & Risk Management Institute (“IDRRMI”) as co-organisers for inviting me to attend this conference It is my great honor to speak to you about recent development of mediation in Vietnam Topics to be Covered I will briefly introduce to you about current investment climate and general legal framework of mediation in Vietnam and then analyze recent development of different mediation regimes such as commercial, investment mediation and court annexed mediation of Vietnam The Opportunities and challenges which Vietnam is facing in view of reforms which are progressing to promote mediation in Vietnam Mr Nguyen Manh Dzung is founding member of ADR Vietnam Chambers LLC He is also editorial member of the Drafting Committees of both Chapter 33 of the Civil Procedure Code of Vietnam (CPC 2015) on the recognition of mediated settlement agreements and Governmental Decree 22/2017/ND-CP dated 24th February 2017, the first legislation on commercial mediation in Vietnam With more than 25 years of experience in negotiating and settling disputes outside of court and in court, Mr Nguyen has been directly or indirectly involved in advising on Investors – State disputes’ settlement in Vietnam (ISDS) He directly participates in the administration of Vietnam Mediation Center (VMC) as a deputy director and closely work together with international experts to build the legal framework and train human resources in both commercial mediation, court annexed mediation and investment mediation in Vietnam He is listed as Mediator of Vietnam Mediation Center (VMC) of Vietnam, Mainland Hong Kong Joint Mediation Center (MHJMC) of Hong Kong, China and Japan International Mediation Center (JIMC) in Kyoto, Japan 1 Investment Climate Until March 2019 Vietnam has 28,125 foreign investment projects with total registered investment capital at 346.5 billion US$ Top foreign investors in Vietnam are South Korea, Japan and Singapore In 2018, total trading volume reached 482.236 billion US$ in which export volume reached 244.7 billion US$ and import volume reached 237.5 billion US$ Top trading partners are China, South Korea and US Thailand shares over 3% of the total FDI, ranked in 3rd of Asean countries behind Singapore (14.09%) and Malaysia (3.6%) Thailand is also ranked number in largest trading partners of Vietnam, approximately reaches 10 billion US$ The national economy of Vietnam is very opened and Vietnam entered into 66 Bilateral Investment Treaties (BIT) and 26 treaties with investment provisions (TIPs), most recently are: Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (2018), EU-Viet Nam FTA expected to be approved by EU Council and the European Parliament in 2019 Vietnam as a member of ASEAN are still negotiating with Australia, China, India, Japan, South Korean and New Zealand on Regional Comprehensive Economic Partnership (RCEP) Legal Framework There are different types of mediation which are regulated by separate legislation in Vietnam, those are: (i) community mediation as regulated by the 2013 Law on Grassroots Conciliation, (ii) employment mediation regulated by Labour Code in 2012, (iii) land law mediation regulated by Land Law in 2013; (iv) investment mediation as provided by the 2005 Law on Investment (Article 12.1) and then 2014 Law on Investment (Article 14), (v) court annexed mediation as provided by Civil Procedure Code 2015 (CPC) and Draft law on court annexed mediation and (vi) commercial mediation recently provided by the Government Decree no 22/CP in 2017 In practice, the most popular mediation are community mediation and court annexed mediation Commercial Mediation: The first legislation on commercial mediation was issued by the Government less than two years but mediation centers have been licensed by the Ministry of Justice of Vietnam There are 81 ad-hoc mediators who registered their independent practice with local departments of justice at provinces International Finance Company (IFC) of the World Bank Group sponsored for training courses organized by CEDR (UK) with 72 accredited mediators and most of them listed on the Vietnam Mediation Center (VMC)’s panel of local mediators VMC also has 13 international mediators Since its establishment last year, VMC has handled construction mediations with the total values in disputes are 934.5 billion Vietnamese Dong (40.3 million US$) We anticipate that more large-scale construction disputes in energy sector are coming to VMC for mediation service Court Annexed Mediation: According to the statistic provided by the Supreme People’s Court of Vietnam (SPC), from 1st October 2018 until 30th September 2018, local courts at provinces has settled 1,331,018 cases among enrolled 1,519,908 cases In 2018, our court system has received 429,352 new cases, increase of 43.9 % in comparison with 2014 The increasing volumes of new cases every year imposes a serious pressure on the court system In an attempt to solve this problem, the Supreme People’s Court has implemented a pilot court annexed mediation program in Hai Phong city for months Hai Phong court set up 10 centers to promote court annexed mediation They have successfully mediated 1827 cases among mediated 2399 cases Successful mediation rate reaches 76.2%, mostly are marriage and family matters Based on this outcome, SPC decided to expand this pilot program into 16 main cities and provinces including Hanoi, Ho Chi Minh city and Danang and now in the process of drafting a new law on court annexed mediation This new law is expected to be passed by the National Assembly in 2020 INVESTMENT MEDIATION The investment mediation receives serious concern from the legislators at the very early stage to promote foreign direct investment into Vietnam As you can see that investment law of Vietnam provides at article 14 that commercial and investment disputes can be settled through negotiation and conciliation a Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CP TPP) Article 9.18 of CP TPP provides the use of non-binding, third party procedures, such as good offices, conciliation or mediation as a method of investor – state dispute settlement Article 28.6 of CP TPP also provides mediation as a method of state to state dispute resolution b European Union and Vietnam Free Trade Agreement (EV FTA) The Investment Protection Agreement between Vietnam and the EU (IPA), a separated part divided from the original EU-Vietnam Free Trade Agreemetn (EVFTA), provide detailed mechanism for settlement of disputes of both state-state and investor-state through mediation According to the provisions of the IPA, any disputing party can invite the other party to conduct mediation in accordance with the procedure stipulated in the Annexes and 10 therein Investment disputes, firstly, are encouraged to settled through negotiation and mediation before referring to consultations and finally, arbitration During the course of the dispute resolution, at any time, any party can invite the other party to conduct the mediation, of which procedure shall be in compliance with the provisions set out in Annex (for state-state disputes) and Annex 10 (for investor-state disputes) REFORMS On December 17, at the General Assembly, Viet Nam were elected to be one of 30 members (together with China, Indonesia, Japan, Malaysia, Republic of Korea and Singapore in Asia) of the UNCITRAL for a six-year term beginning on July 2019 Vietnam is planning to actively participate activities of UNCITRAL working groups especially working group on arbitration and mediation and working group on ISDS On 11 January 2019, Ministry of Industry and Commerce of Vietnam has nominated candidates to Roster of Panel Chairs and Party Specific Indicative List under Article 28.11 of CP TPP With the sponsorship of international donors such as IFC of the World Bank Group, USAid, etc There has been various training courses, conferences and seminars on ISDS, particularly investment mediation organized in Vietnam “Mediation Mechanism”, (Annex of IPA) accessed April 2019 “Mediation mechanism for the resolution of disputes between investors and parties”, (Annex 10 of IPA) accessed April 2019 Both Ministry of Justice of Vietnam and Supreme People’s Court of Vietnam are developing commercial mediation and court annexed mediation regimes by drafting various legislation, licensing mediation institutions and accrediting mediators Vietnam also encourages international dispute resolution practitioners to participate on panels of international arbitrators and mediators in domestic arbitration and mediation institutions such as Vietnam International Arbitration Center (VIAC) and Vietnam Mediation Center (VMC) and to sit in arbitral tribunals and conduct mediation for investment disputes under international standards CONCLUSION The surge of foreign investment and international economic integration leads to an inflation of international disputes which relates to foreign investors and trading partners in Vietnam or involves the foreign investors and the FDI companies themselves, which requires an effective dispute resolution method It is obvious that using mediation is a new trend now when it comes to dispute settlement Thus, to keep up with the trend in the best way, Vietnam needs to further improve the legal framework for commercial mediation, particularly the regulations regarding to the mediation settlements from overseas proceedings, the training as well as the accreditation mechanism for mediation professional In spite of the incomplete legal framework which still needs to be improved, with great support by not only local state authorities but also international organizations, we have a strong belief that mediation will no longer be “an alternative form of dispute resolution”, but rather the main form of resolution of commercial and investment disputes in Vietnam./ ... activities of UNCITRAL working groups especially working group on arbitration and mediation and working group on ISDS On 11 January 2019, Ministry of Industry and Commerce of Vietnam has nominated candidates... decided to expand this pilot program into 16 main cities and provinces including Hanoi, Ho Chi Minh city and Danang and now in the process of drafting a new law on court annexed mediation This... Both Ministry of Justice of Vietnam and Supreme People’s Court of Vietnam are developing commercial mediation and court annexed mediation regimes by drafting various legislation, licensing mediation